Financial History 25th Anniversary Special Edition (104, Fall 2012) - Page 24

© Bettmann/CORBIS on the NYSE reported a yearly high. The aeronautics companies were not immune to this damaging effect. Boeing lost one and a quarter points, equivalent to 3.6% of the company’s worth, by the close of the day following Sputnik’s launch (the NYSE opened on Saturdays back then). Grumman’s stock, by contrast, did not suffer as badly at first, but the remainder of the following week was not kind to either company. With the majority of companies on the NYSE posting negative results for the week after October 4, Boeing lost nearly another 4% of its stock value and Grumman plummeted almost 10%. The apparent Soviet dominance in the Space Race continued in April 1961 with the successful launch and return of Yuri Gagarin, the first human in space. This remarkable achievement, a much better demonstration of Soviet capabilities than the launch of Sputnik, failed to have the same type of impact on the markets or upon the American psyche that the launch of Sputnik created. Boeing gained just under 1% of its value while Grumman lost 2% and NAA gained 2% during the days following Gagarin’s pioneering trek. While some newspapers carried stories about how this was a further demonstration of Soviet leadership in the Space Race, the acknowledgement of Soviet leadership by the American government and public generally (not a passive sentiment, to be sure) made Gagarin’s feat less of a shock than the utter surprise that was Sputnik. John F. Kennedy’s speech before a joint session of Congress on May 25, 1961 galvanized the American effort to gain technological mastery over the Soviets in the Space Race. At the beginning of the 1960s, many thought the Soviets were in the lead by a span of several years. JFK admitted as much and argued that in order to have a fighting chance of catching the Soviets, the nation had to commit itself to the tough goal of landing a man on the moon by the end of the decade. A year and a half after JFK’s speech, prominent members of the American scientific community continued to predict the Soviets would win the race to the moon, barring a “sudden breakthrough.” So clearly JFK’s speech was not an instant turning point for the aeronautics industry or the nation as a whole, but has come to be seen as such due to America’s eventual success in the Space Race. This conclusion is bolstered by analysis Commuters read newspapers with headlines announcing the failure of US Vanguard missile, 1957. of aerospace company stock prices, which were detached from the President’s speech. Boeing’s stock rose only one-eighth of a point after the speech, suggesting that investors considered the speech more bluster than the harbinger of big government contracts. Similarly, TRW’s stock experienced the typical daily fluctuations, showing no significant reaction to JFK’s speech (it fell marginally the day after). Grumman’s stock jumped 1.8% on the day of the speech, but the increase appears to have been independent of the President’s soaring rhetoric. Aerospace stock did not increase dramatically immediately following the speech because NASA’s planning had already put the US on a slightly longer but very similar deadline, with circumlunar (moon orbit) flights planned for late in the decade and manned missions to the lunar surface not long after. Moving up this deadline served as little more than an increased logistical challenge to the engineers behind the project and a nice bit of PR for JFK and the United States. 22    FINANCIAL HISTORY  |  Fall 2012  | Apollo 11, the first mission to land a human being on the moon, was a major event in American and world history. Such a remarkable occurrence, however, had little discernible effect on the stock prices of the big three aerospace companies. TRW, Boeing and even Grumman suffered losses over the course of the week following the historic mission. It might have been expected that the perfect performance of Grumman’s groundbreaking Lunar Lander would have shone favorably upon the company, but it lost almost 4% of its value over the following week. Boeing’s value fell by 2.4% over t